Recently, the Government identified over 200 businesses, of various sizes and from diverse sectors, that didn’t meet the national minimum wage (NMW). Big names like WH Smith, Argos, and Marks & Spencer were among these.
Collectively, these businesses owe nearly £5 million to their employees. The government has ordered these companies to pay back over 63,000 workers and face penalties of £7 million from HM Revenue & Customs.
Common mistakes
Most of the time, these companies didn’t realise they were doing anything wrong or had already fixed the problems.
39 per cent of companies didn’t pay workers the right amount, often because they took too much money off their wages. Another 21 per cent didn’t pay apprentices the right amount.
Big names like Pret A Manger, John Lewis, and The Body Shop have also been on this list before for not paying the minimum wage.
Other reasons
There are also other reasons why companies don’t pay the NMW.
Sometimes, companies call their workers self-employed when they should be employees, and this can lead to them getting paid less.
Salary sacrifice schemes can also cause problems. HM Revenue & Customs (HMRC) looks at the pay after any sacrifices to decide if it meets the NMW.
If a worker gives up part of their salary for benefits like childcare or a cycle-to-work scheme, the employer has to make sure they still get the NMW after this.
Some companies don’t pay for travel time between jobs, which is another reason they don’t meet the minimum wage.
Taking money off pay for things like uniforms or other benefits can also lower pay and break NMW rules.
Some employers don’t pay for overtime, or don’t put workers’ pay up when they should because of yearly increases in the NMW or NLW or when a worker has a birthday that changes their rate.
Accidental errors
Lots of big brands said they made these mistakes by accident. For example, WH Smith got the rules about uniforms wrong, and Marks & Spencer said a technical problem from four years ago meant some temporary workers got paid less.
Sainsbury’s, which owns Argos, found out about a payroll mistake from 2018 that affected some Argos workers and drivers, and this mistake went back to 2012, before Sainsbury’s bought Argos.
Avoiding mistakes
Most of the time, employers break NMW rules because they don’t keep good enough records. It is important for employers to know how the wage rules apply to their workers. Employees should be paid for all time spent at work, when on call or travelling for work, or going to work-related meetings and training. Some employers don’t include this when working out wages.
Employers also need to have systems that put up workers’ wages as they get older. If they don’t do this, they could get taken to an employment tribunal and have to pay big fines.
If you need help to make sure your business is paying the NMW, get in touch with us today.